MINNEAPOLIS (WCCO) – When you join a health club, and it shuts down, you don’t have to keep paying your monthly fee. But when the state of Minnesota shuts down, we keep paying our income and sales taxes. Why?

“I’d like to know why we have to pay state taxes when the state’s shut down and not providing the services we get for those tax dollars,” said Bruce, one of the nearly 100 people who submitted this Good Question.

“Why should we have to, if there’s not really a government right now in our state,” asked Cathy, another emailer.

“All tax laws remain in effect, taxpayers have to file on-time and pay on-time,” said Myron Frans, commissioner of the Minnesota Department of Revenue.

Frans pointed out that Minnesota’s tax laws don’t have an expiration date. So just because there’s no deal on how the state will spend our money, it’s still the law that we have to pay.

“All the laws stay in effect until changed or repealed,” Frans said.

Of course, that wouldn’t be the case if the Ramsey County judge overseeing what is deemed a “critical function” of state government had ruled differently.
Judge Kathleen Gearin decided that collecting tax revenue was an essential element of the government’s financial system. As the Department of Revenue’s website explains, that includes “the borrowing and tax collection activities of the government and the systems needed to support these activities.”

So who’s collecting the money?

“We have people downstairs, not many, they’re opening mail, collecting the checks and depositing the checks,” Frans said.

He said the Department of Revenue typically has around 1,500 employees, but now there are fewer than 100 working, Frans said.

He said the real number is actually less than 50.

From the start of the shutdown through July 8, the state has collected $8.2 million in sales taxes. They’ve collected $160 million of withheld income tax, according to the commissioner.

“The court ruled the collections staff was essential, and ruled the payment of refunds staff was not essential,” Frans said. “That’s another disconnect.”

So Minnesotans will not receive a renter’s refund or property tax refund until the shutdown is over.

“If you stopped collecting all money, would that be catastrophic?” asked WCCO-TV reporter Jason DeRusha.

“It would,” Frans said. “It would mean eventually we wouldn’t be able to pay our bills.”